Analyzing the Strasburg deal

When discussing Stephen Strasburg’s $15.1 million contract with the Washington Nationals, most people have compared it to the $10.5 million deal signed by Mark Prior in 2001. It’s a natural comparison, as Prior’s deal was a record for a drafted player until Strasburg came along.

But in reality, the two contracts are somewhat different, and a close analysis shows that this could be an even better deal for Strasburg than we first thought. Agent Scott Boras did well for his client because Strasburg gets a record deal for barely more than three years of service time, and still will be eligible for arbitration in 2013 and 2014, and free agency in 2015. (The Nationals could have bought out those arbitration years, but declined to do so, according to Boras.)

Let’s look at how each deal breaks down.

Strasburg’s contract is a 4-year deal that starts in 2009. He’ll get $7.5 million in a signing bonus paid in three installments, plus a salary from 2009-2012. Here’s the breakdown of the salaries:

So in other words, the Nationals are really paying $7.5 million in salary over three years, plus a little bit of this year if he decides to pitch.

Prior’s contract was a 5-year deal that started in 2002, the first full year after he signed. (He didn’t play anywhere in 2001.) He got a $4 million signing bonus, and then salary that broke down this way:

2002: $250,0002003: $650,0002004: $1.6 million2005: $2 million

In the fifth year of his deal in 2006, he was due to make $2 million. But his contract terms permitted him to opt out of the deal if he would have been eligible for arbitration. He was, and did opt out, securing a new one-year deal for $3.65 million.

The biggest thing to point out about Strasburg’s deal is that it does not buy out any arbitration years. If he pitches every year between now and 2012, he will be eligible for arbitration in 2013, after this contract expires, and again in 2014. If Strasburg pitches as well as the hype, he’d command a hefty price in arbitration.

I argued earlier this summer that the Nationals could have gotten a bargain by buying out the arbitration years now. But as it stands now, the Nationals will likely try to negotiate a longer term deal a few years down the road, when Strasburg’s value may be higher. And keep in mind that Boras usually likes to see his clients go to free agency where they can make the really big bucks. So the Nationals may not be too far off from yet another showdown with Boras.

SEE RELATED:

QUICK UPDATE: I am basing the projections of arbitration years on the assumption that he will be a regular part of the Nats rotation next year. USA Today’s Bob Nightengale tweeted that Boras hopes Strasburg could start as late as 2011. From Nightengale’s twitter feed:

“Strasburg may or may not pitch in the major leagues next year,” Boras says. “We really hope they take their time developing him.”